Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, generally three years. Leasehold improvements are amortized
using the straight-line method over the estimated useful life of the improvement, or the lease term, if shorter. Accordingly, leasehold improvements are being amortized over lease terms of approximately 4-5 years. Maintenance and repairs are charged
to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations.

NOTE 4PROPERTY AND EQUIPMENT

Property and
equipment comprise the following (in thousands):

December 31,

2008

2007

Computer and office equipment

$

866

$

866

Laboratory equipment

1,253

1,238

Leasehold improvements

2,795

2,795

4,914

4,899

Less: Accumulated depreciation and amortization

(3,746

)

(2,802

)

Total property and equipment, net

$

1,168

$

2,097

Depreciation and amortization expense was $1.0 million, $1.1 million, $0.9 million and $3.8
million for the years ended December 31, 2008, 2007 and 2006, and, cumulatively, for the period from October 17, 2001 (date of inception) to December 31, 2008, respectively.

Certain laboratory, computer and office equipment with a cost basis of approximately $0.6 million is collateral for borrowings under the loan and
security agreement with Silicon Valley Bank.

Depreciation and amortization expense was $1.1 million, $0.9 million, $0.6 million and $2.8
million for the years ended December 31, 2007, 2006 and 2005, and, cumulatively, for the period from October 17, 2001 (date of inception) to December 31, 2007, respectively.

Depreciation expense was $0.9 million, $0.6 million, $0.1 million and $1.7 million for the years
ended December 31, 2006, 2005 and 2004, and, cumulatively, for the period from October 17, 2001 (date of inception) to December 31, 2006, respectively.

Certain laboratory, computer and office equipment with a cost basis of approximately $1.3 million is collateral for borrowings under the loan and security agreement with Silicon Valley Bank.

NOTE 4PROPERTY AND EQUIPMENT

FACE="Times New Roman" SIZE="2">Property and equipment comprise the following (in thousands):

December 31,

2006

2005

Computer and office equipment

$

901

$

330

Laboratory equipment

1,202

728

Leasehold improvements

2,787

1,426

4,890

2,484

Less: Accumulated depreciation

(1,721

)

(817

)

Total property and equipment, net

$

3,169

$

1,667

Depreciation expense was $0.9 million, $0.6 million, $0.1 million and $1.7 million for the yearsended December 31, 2006, 2005 and 2004, and, cumulatively, for the period from October 17, 2001 (date of inception) to December 31, 2006, respectively.

FACE="Times New Roman" SIZE="2">Certain laboratory, computer and office equipment with a cost basis of approximately $1.3 million is collateral for borrowings under the loan and security agreement with Silicon Valley Bank.

STYLE="margin-top:18px;margin-bottom:0px">NOTE 5ACCRUED LIABILITIES:

Accrued liabilitiescomprise the following (in thousands):

December 31,

2006

2005

Payroll and employee related expenses

$

1,610

$

1,265

Professional services

384

369

Other accrued expenses

292

524

Total Accrued liabilities

$

2,286

$

2,158

In August 2006, the Company adopted a plan to reduce its operating expenses, following itsdecision to discontinue development of TH-070 for benign prostatic hyperplasia. The plan included a reduction of 29 full-time employees in both research and development and general and administrative areas of the Company. As a result of the staffingreduction, the Company incurred severance benefits of approximately $1.0 million during the quarter ended September 30, 2006. The payout of the accrued severance benefits was completed in the fourth quarter of 2006.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The following table sets forth an analysis of the restructuring accrual during the year ended December 31, 2006 (in thousands):

Depreciation expense was $0.9 million, $0.6 million, $0.1 million and $1.7 million for the years
ended December 31, 2006, 2005 and 2004, and, cumulatively, for the period from October 17, 2001 (date of inception) to December 31, 2006, respectively.

Certain laboratory, computer and office equipment with a cost basis of approximately $1.3 million is collateral for borrowings under the loan and security agreement with Silicon Valley Bank.

Depreciation expense
was $573,000, $143,000, $90,000 and $817,000 for the years ended December 31, 2005, 2004 and 2003, and, cumulatively, for the period from October 17, 2001 (date of inception) to December 31, 2005, respectively.

Certain laboratory, computer and office equipment with a cost basis of
approximately $0.7 million is collateral for borrowings under the loan and security agreement with Silicon Valley Bank.